Creating a Personal Umbrella Coverage Checklist
September 2009
In the article, "Plugging
Liability Insurance Gaps with the Personal Umbrella Policy," I introduced
many of the additional coverages provided by a good personal umbrella liability
insurance policy that are not, as a rule, covered under primary automobile and
homeowners insurance policies. In the article "Creating
and Using a Personal Umbrella Comparison Form," I showed the process I use
to create a comparison spreadsheet on the different personal umbrella policies
I represent. "Choosing
the Best Umbrella Policy: Case Study" illustrates how, through practical
example, the comparison spreadsheet is used. In this article, I share with you
the checklist I created to help clients identify which optional umbrella coverages
they need to plug liability coverage gaps in underlying policies.
by
Jack Hungelmann
Corporate
4 Insurance Agency, Inc.
You will find this checklist and full details on each listed coverage in
Chapter 16 in the just released second edition of my book,
Insurance for Dummies. Here is the
checklist.
On the checklist, I list "mandatory coverages" and "optional coverages."
Mandatory coverages are those coverages that I think should be included for
everyone, such as true worldwide coverage that includes worldwide defense coverage.
Another example is coverage for punitive damages, even if your state disallows
them. This is because you might cause an accident while traveling in a state
that does allow punitive damages. Optional coverages are those exposures that
not everyone has, but if you do have that exposure, for you, it's a mandatory
coverage need.
On the checklist form, there are three columns. The "Gap Description" is
the exposure that is not covered by underlying policies in most cases. The second
column, "What Coverage You Need," provides examples that clarify the nature
of the gap. The third and final column includes my comments on what to watch
out for with each coverage. Here is a brief recap of the process.
- Gather all applicable umbrella policies, including mandatory endorsements.
- Create an umbrella comparison spreadsheet from the comparative analysis
that you have performed. (See the
current comparison spreadsheet, which includes the recently updated
umbrella policy for Progressive and the addition of my RLI umbrella analysis.)
- Create a checklist from the spreadsheet to identify primary insurance
coverage gaps.
- And finally, match the checklist results against the comparison spreadsheet
and select the insurance company or companies that best cover your or your
client's underlying liability insurance gaps.
Many insurance companies require proof of all or part of the underlying insurance
program before making their umbrella available. Because of that fact, and because
uninsured liability claims are potentially financially disastrous, I sometimes
find myself needing to start from the top down and pick the best umbrella policy
for the client first before trying to place their underlying insurance policies.
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